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Interest rate risk

Definition:

The chance that a security's value will change due to a change in interest rates. For example, a bond's price drops as interest rates rise. For a depository institution, also called funding risk: The risk that spread income will suffer because of a change in interest rates.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

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Insurance

Guarding against property loss or damage by making payments in the form of premiums to an insurance company, which pays an agreed-upon sum to the insured in the event of loss.

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